Top Features to Look for in DES (Double-Entry Software) for Small BusinessesRunning the finances of a small business well means choosing accounting software that enforces good accounting principles while remaining simple, affordable, and adaptable. Double-entry software (DES) — systems that record every transaction as both a debit and a credit — helps ensure accuracy, detect errors, and produce reliable financial statements. This article walks through the top features small businesses should look for when selecting a DES solution, why each matters, and how to evaluate vendors against real-world needs.
1. True double-entry bookkeeping (not just “single-entry with reports”)
Why it matters
- True double-entry bookkeeping enforces that every transaction affects at least two accounts, which preserves the accounting equation (Assets = Liabilities + Equity) and reduces balancing errors.
- It enables accurate trial balances, reliable financial statements, and simpler audits.
What to look for
- Native support for debits and credits on every journal entry.
- Automatic ledger updates and a built-in general ledger.
- Clear, accessible journal and ledger views so you can inspect raw entries if needed.
How to evaluate
- Create a sample transaction (e.g., purchase inventory on credit) and confirm the system shows both the inventory and accounts payable impacts.
- Check that reversing or correcting entries are supported and traceable.
2. Chart of accounts flexibility and templates
Why it matters
- A well-structured chart of accounts (CoA) organizes financial data for reporting and tax compliance.
- Small businesses evolve; the CoA should be easy to adapt without breaking historical data.
What to look for
- Customizable CoA with hierarchical categories (e.g., parent/child accounts).
- Industry-specific templates (retail, services, manufacturing) to speed setup.
- Ability to merge, rename, or reclassify accounts while preserving historical integrity.
How to evaluate
- Inspect default CoA templates and test adding custom accounts and subaccounts.
- Ask how the software handles reclassification (does it create retrospective adjustments or only affect future entries?).
3. Invoicing, billing, and payment processing integration
Why it matters
- Tight integration between sales documents and accounting reduces manual entry, speeds up cash flow, and improves receivables tracking.
What to look for
- Native invoicing with customizable templates and terms.
- Automatic posting of invoices to the ledger and generation of accounts receivable entries.
- Integrations with payment processors (Stripe, PayPal, bank ACH) to record receipts automatically and reconcile payments.
How to evaluate
- Create and send an invoice, then simulate a payment and confirm both the AR and bank entries are posted automatically.
- Check support for partial payments, credit memos, and recurring invoices.
4. Expense tracking, bills, and vendor management
Why it matters
- Accurate expense capture ensures correct profit measurement and simplifies tax preparation.
What to look for
- Bill entry with due dates, vendor accounts, and automatic accounts payable posting.
- Receipt capture (mobile/photo upload and OCR) to attach evidence to transactions.
- Vendor statements, aging reports, and automated reminders.
How to evaluate
- Enter vendor bills and schedule payments; verify AP aging and cash flow projections update accordingly.
- Test receipt upload and confirm it attaches to the correct transaction.
5. Bank feeds and automated reconciliation
Why it matters
- Connecting bank accounts and credit cards reduces manual data entry and helps catch fraud or bank errors early.
What to look for
- Secure bank feeds (direct or via trusted aggregation) with fast refresh.
- Smart matching and rules to automate reconciliation.
- Bulk reconciliation and discrepancy reporting.
How to evaluate
- Link a bank account (or simulate) and confirm the imported transactions can be matched automatically to invoices, bills, and journal entries.
- Verify how the system handles unmatched items and how easy it is to create matching rules.
6. Robust reporting and financial statements
Why it matters
- Small business owners need timely and understandable reports for decisions, lending, and tax filings.
What to look for
- Standard financial statements: balance sheet, income statement (profit & loss), cash flow statement.
- Customizable reports, date ranges, comparative periods, and segment/department filtering.
- Export options (CSV, PDF, Excel) and report scheduling.
How to evaluate
- Generate monthly and year-to-date P&L and balance sheet reports; confirm numbers tie to the general ledger.
- Test segmentation (projects, departments) to ensure reliable roll-up reporting.
7. Multi-currency and international features (if applicable)
Why it matters
- Businesses dealing with foreign customers, suppliers, or banks need accurate currency translation and gain/loss tracking.
What to look for
- Multi-currency transactions with automatic exchange rate updates.
- Realized/unrealized FX gain/loss accounting and reporting.
- Separate functional currency vs. transaction currency handling.
How to evaluate
- Enter invoices and bills in different currencies and check how the software posts both foreign currency amounts and converted functional currency amounts.
- Review FX gain/loss postings after reconciling a foreign currency bank transaction.
8. Tax support and compliance
Why it matters
- Correct tax calculation, reporting, and filing support avoid penalties and reduce bookkeeping workload.
What to look for
- Tax category setup for sales tax/VAT/GST, with tax-inclusive/exclusive pricing options.
- Automated tax calculations on invoices and purchase documents.
- Tax reporting exports and integration with filing or tax-prep tools.
How to evaluate
- Configure regional tax rates and create transactions to see tax lines generated correctly.
- Produce tax liability reports for a typical reporting period.
9. User roles, audit trail, and internal controls
Why it matters
- Internal controls prevent fraud and ensure accountability; audit trails are essential for audits and corrections.
What to look for
- Role-based access controls (RBAC) with fine-grained permissions (view-only, payables, reconciler, admin).
- Immutable audit logs that record who made changes, what changed, and timestamps.
- Approvals and workflows for bills, purchase orders, and payments.
How to evaluate
- Create multiple user accounts with different roles and confirm restrictions are enforced.
- Make and then amend an entry to inspect the audit trail and see restoration or reversal options.
10. Scalability, integrations, and API access
Why it matters
- As the business grows, the accounting system should integrate with CRM, inventory, payroll, POS, e-commerce, and BI tools.
What to look for
- Pre-built integrations for common business apps (Shopify, Square, QuickBooks migrations, payroll).
- Comprehensive API for custom integrations and automation.
- Modular architecture or add-ons for advanced needs (inventory costing, project accounting).
How to evaluate
- Review the list of native integrations and test critical ones (POS, e-commerce).
- Ask for API documentation and a sandbox to try common tasks (create invoice, query ledger).
11. Inventory and cost accounting (if inventory-based)
Why it matters
- Accurate inventory accounting affects COGS, margins, and tax reporting.
What to look for
- Support for costing methods (FIFO, LIFO if applicable, weighted average) and stock valuation.
- Integration between sales, purchase, and inventory modules so COGS is posted automatically.
- Inventory adjustments, serial/batch tracking, and reorder points.
How to evaluate
- Run transactions that change inventory (purchase, sale, adjustment) and confirm COGS and inventory asset accounts update properly.
- Check inventory reporting and valuation summaries.
12. Project/job costing and time tracking (for service businesses)
Why it matters
- Projects and jobs require tracking of costs and revenues to measure profitability by client, job, or engagement.
What to look for
- Job/project codes attached to transactions and time entries.
- Time tracking integrated with billing and payroll.
- Project P&L and margin reports.
How to evaluate
- Create a sample project, record time and expenses against it, and verify consolidated project reporting.
13. Ease of use and onboarding support
Why it matters
- Small businesses often lack full-time accountants; the software should minimize complexity and speed adoption.
What to look for
- Intuitive UI, guided setup wizards, and industry-specific presets.
- Quality documentation, tutorials, and accessible customer support.
- Migration tools and bookkeeping partner programs for setup help.
How to evaluate
- Ask for a product tour or trial and time how long it takes to set up a basic CoA and post common transactions.
- Review help center resources and support SLAs.
14. Security, backups, and data ownership
Why it matters
- Financial data is sensitive; small businesses must protect it and retain control.
What to look for
- Encryption in transit and at rest, regular backups, and clear data export options.
- Two-factor authentication (2FA) and IP or device whitelisting for admin accounts.
- Clear terms on data ownership and exportability.
How to evaluate
- Review security documentation, test 2FA, and confirm easy export of the full dataset (journal, ledger, attachments).
15. Pricing model and total cost of ownership
Why it matters
- Upfront price is only part of the cost; consider transaction volume fees, add-on modules, user fees, and migration expenses.
What to look for
- Transparent pricing tiers and clear limits (number of users, transactions, or accounts).
- Predictable upgrade path and ability to add modules without disruptive migrations.
- Trial period to test real usage before committing.
How to evaluate
- Calculate annualized costs including third-party integrations, payment processing fees, and expected support levels.
- Compare feature sets at the price points that match your needs.
Choosing the right DES for your small business: a short checklist
- Does it enforce true double-entry accounting? Yes/No
- Can you customize the chart of accounts and keep historical integrity? Yes/No
- Are invoicing, payments, bills, and bank feeds automated and reconciled? Yes/No
- Does it produce accurate financial statements and useful reports? Yes/No
- Are security, audit trails, and role-based permissions solid? Yes/No
- Will it integrate with your current systems and scale as you grow? Yes/No
- Is the total cost predictable and within budget? Yes/No
Choosing a DES is about balancing accounting rigor with usability and cost. For many small businesses, the best system is one that enforces correct accounting, automates repetitive tasks (invoicing, reconciliation, tax), and integrates with the tools that drive revenue. Test shortlisted products with real transactions and users before committing, and ensure you can export your data easily if you ever switch providers.
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